Digital technology adoption in all stages of upstream operations in the oil and gas industry has seen a steep rise recently. While a lot has been written about the benefits of digitizing various aspects of the well-drilling, extraction, and field maintenance processes, there is also another major field where digital tech is changing the game: before the well-drilling even begins.
In Alaska, for instance, new technology in oil and gas exploration has led to the discovery of more than 1.5 billion barrels of crude oil in the North Slope in just two years, S&P Global Platts recently reported. These are deposits that were known to be there but the resources they held could not be mapped or measured, so the deposits were considered unproductive before digital tech, in the form of advanced 3D seismic surveys and new data processing techniques, came along.
So, established exploration methods are one area where there is a surge of improvements, as seen in the Alaska case, but there are also alternative exploration techniques emerging around the world. One of these is, interestingly enough, soil analysis. A Dutch company, Biodentify, collects thousands of soil samples to analyze the DNA of thousands of microorganisms for traces of hydrocarbons in their environment. The company utilizes machine learning for the task and to calculate the potential reserves of a deposit with, according to the company, more than 70 percent accuracy. What’s more, the whole procedure takes between 6 and 10 weeks, which is a relatively short time, especially in light of the fact that it reduces the risk of drilling unproductive wells.
As digital technology matures and machine learning techniques advance, we’ll probably be seeing a lot more different exploration techniques that reduce the risk of spending millions on a well only to find out it’s dry. Despite last year’s international oil price improvements, the industry is still being cautious and there are indications it is beginning to like this new normal of leaner and meaner, to a significant extent enabled by technology. Related: Oil Prices See Best January In 14 Years
Oil and gas companies, even the most resilient and successful among them, are keeping their spending under control. True, some supermajors have announced larger budgets for this year than last but for the most part, the industry is keeping a lid on expenses and trying to get more from every dollar spent than before.
This is an environment conducive to a lot of innovation in all stages of the production process. New drilling tech is also helping lower costs and improve results. S&P Global Platts’ Tim Bradner notes coiled tubing drilling as an alternative to the multilaterals in horizontal drilling. Coiled tubing involves drilling horizontal wells with a flexible tubing bit, which is cheaper than drilling with rotary rigs. It could be so cheap, in fact, that drilling costs per barrel of new oil in already producing fields could be as little as US$30.
Shell, on the other hand, is focusing on developing artificial intelligence to use in drilling, among other things. Business and tech expert Bernard Marr wrote recently in a story about his work on data strategy with the supermajor that Shell is using reinforcement learning, a form of machine learning, to improve drilling results and also reduce wear and tear on the equipment, which ultimately, once again, saves costs.
The list of examples can continue and it will only become longer in the future. The oil and gas industry has been remarkably fast in adopting what digital technology has to offer and spurring innovation aimed specifically at the industry.
Editors' Note: Biodentify has not played a role in the above mentioned exploration process that led to the discovery in Alaska's North Slope.
By Irina Slav for Oilprice.com
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